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Experts share the two most common mistakes people make with their pensions

ended 30. July 2025

Experts have shared the two most common mistakes people make with their pensions.

Molly Pile, Chartered Financial Planner at Fernbank Wealth, says the first thing to do is check in on them regularly to ensure all is in order.

She says: "A common mistake with pensions is never checking them! Specifically I see lots of people with workplace pensions who never check or change the investments and leave them in a default, low to medium-risk fund.

"The compounding effect of having the incorrect investment strategy over potentially several decades means potentially £000s of growth is left on the table. 

"One small change can quite literally be the difference in being able to retire years earlier, instead of having to stick work out until you reach state pension age.

"Another big change on the horizon is that pensions will soon form part of the estate for inheritance tax. Those concerned about pension inheritance tax might consider spending more of their money now, using their gifting allowances each year or utilising trusts."

George Ladds, Owner at Money Wise UK, warned that too many people look at their pensions in isolation: “Your retirement income isn’t just your pension. Remember that ISAs, investments and property also play a role. A common mistake is focusing only on pension pots instead of how all these assets work together.

“My advice for anyone five years out from retiring: write down a plan and ask your adviser if they follow the FCA’s latest thematic review and have a clear centralised retirement proposition.”

5 responses from the Newspage community

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Editor
Scott Gallacher
Director at Rowley Turton
Does Rachel Reeves’ IHT raid on pensions spell the end for SIPPs and SASSs? For years, company directors have sensibly used these pensions to hold their business premises — a strategy offering tax efficiency, control, and long-term planning. But from April 2027, pensions will be dragged into the IHT net, while business premises held directly by the company may still qualify for Business Relief. This turns a once-prudent planning route into a potential tax trap. We could see a wave of properties being sold out of pensions and back into trading companies — creating headaches for SIPP and SASS providers like Mattioli Woods. A policy meant to raise revenue could end up destabilising an entire segment of the pensions market.
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Editor
Laura Purkess
Personal Finance Expert at Investing Insiders
The AIC has written to the government warning about using its powers to force pension schemes to invest in private markets https://www.theaic.co.uk/sites/default/files/documents/AICTorstenBellMP-220725.pdf
"The government's use of 'reserve powers' to potentially force pension funds to invest in private markets should raise alarm bells. The Accord was signed on the basis that participation was voluntary, and these reserve powers undermine that agreement. It is also pension trustees' responsibility to do what is in the best interests of members, and being forced to meet strict asset allocation targets doesn't necessarily align with that duty. Any government intervention in this process risks undermining trust in the system, and it will need to be carefully scrutinised and justified to ensure it works for savers."
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Kundan Bhaduri
Entrepreneur, Investor and Landlord at The Kushman Group
Five years from retirement is not the time to gamble, but it is certainly not the time to sleepwalk either. Too many people drift into their sixties assuming the State Pension and a smattering of old workplace schemes will see them through. The reality is that a full new State Pension pays only £11,502 a year, which won't sustain a rising cost of living that has outpaced wages for almost two decades now. A ‘moderate’ retirement now costs circa £23,300 per year for one person, meaning the State Pension provides less than half of what you actually need. You should also check your lost pots with over £26.6 billion currently sat in dormant defined contribution pensions. The most dangerous assumption in personal finance is thinking a brand name equates to value. Many are stuck in underperforming funds charging 2x the fees of better alternatives. The difference in charges alone can slash retirement income by over £120,000 across a working life. Beware of sleepwalking into retirement.
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George Ladds
Owner at Money Wise UK
Retirement isn’t a straight line, it’s personal. How much you need depends on your goals, and it doesn’t have to mean stopping work overnight. Many people now take a staged approach, reducing work over several years. Your retirement income isn’t just your pension – ISAs, investments, and property all play a role. A common mistake is focusing only on pension pots instead of how all assets work together. My advice for anyone five years out: write down a plan and ask your adviser if they follow the FCA’s latest thematic review and have a clear centralised retirement proposition. With key tax and pension changes coming in 2027, good advice matters more than ever. At Money Wise UK, we work with advisers and providers to improve retirement planning and outcomes. We also hold the trademark for Centralised Retirement Proposition!
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Molly Pile
Chartered Financial Planner at Fernbank Wealth
A common mistake with pensions is never checking them! Specifically I see lots of people with workplace pensions who never check or change the investments and leave them in a default, low to medium-risk fund. The compounding effect of having the incorrect investment strategy over potentially several decades means potentially £000s of growth left on the table. One small change can quite literally be the difference in being able to retire years earlier, instead of having to stick work out until you reach state pension age!

A big change on the horizon is that pensions will soon form part of the estate for inheritance tax. Those concerned about pension inheritance tax might consider spending more of their money now, using their gifting allowances each year or utilising trusts.